China’s COFCO Group is merging a pair of real estate developers with a combined market cap of $4.7 billion dollars as the state-owned conglomerate follows through on restructuring plans related to state-owned enterprise reform and cross-border transactions first announced in January. The move brings the equity listing of one of China’s biggest commercial real estate developers back to a mainland exchange at the same time that the government is urging its largest tech players to list in Shanghai or Shenzhen.

Shenzhen-listed COFCO Property will buy its controlling stake in Joy City for RMB 14.76 billion ($2.35 billion) from Vibrant Oak Ltd, a wholly-owned subsidiary of COFCO, a filing to the Shenzhen Stock Exchange shows. In return, Vibrant Oak will get 2.14 billion shares issued by COFCO Property.

COFCO Aims for Real Estate Synergy

Shanghai Joy City, which will soon be owned by COFCO Property

“The transaction will inject new commercial real estate elements into the core business of the company and release the synergistic effect of the integration of the residential and commercial sectors,” COFCO Property said in the statement. “After the completion of the transaction, COFCO Property will become COFCO’s sole platform that covers residential and commercial real estate.” COFCO Property and Joy City Property could then allocate resources more effectively, and realise the sharing of both risks and benefits, the company added.

COFCO Property is also planning to issue shares to no more than 10 investors to raise as much as RMB 2.4 billion ($382 million) for the development of two projects, the statement says. The company plans to allocate RMB 916 million ($146 million) to COFCO Landmark Plaza and RMB 1.5 billion to a Joy City shopping mall in Hangzhou.

Hong Kong-listed Joy City Property was known as COFCO Land Holdings until 2015, when it was renamed to highlight the flagship Joy City shopping centre brand.

Food Conglomerate Part of State Restructuring

China’s biggest foodstuffs conglomerate has been undertaking a company-wide restructuring programme as the central government strives to make state-owned companies more efficient. In July 2014, COFCO was selected as one of six central government-controlled state-owned enterprise groups to pilot mixed-ownership reforms. The group embarked on its restructuring program in February 2015 when the government approved its reform plan.

COFCO Merges Commercial and Residential Real Estate Divisions

Based out of Shenzhen, COFCO Property focuses on residential and industrial property development. It owns projects in 12 first and second-tier cities including Beijing, Shanghai, Shenzhen, Chengdu, Shenyang and Yantai, according to its corporate website.

Hong Kong-listed Joy City Property primarily engages in the development, operation, sales, lease and management of commercial complexes under the flagship brand “Joy City (大悅城)”. As of late 2016, the Joy City has nine Joy City urban complexes in seven mainland cities including Beijing, Shanghai, Tianjin, Shenyang, Yantai, Hangzhou and Chengdu. It owns Beijing COFCO Plaza and Hong Kong COFCO Tower.